For a lot of business owners, the reasoning is simple — get enough customers and we’ll be golden. However, acquiring new customers is just one piece of the puzzle, and there are many more areas that you need to focus on in order to stay successful.
Customer retention is one of those areas!
Sadly, businesses aren’t focusing on this aspect as much as they should.
A recent report found that as opposed to only 16% that are more focused on retention.
Are a significant number of your existing customers leaving because you can’t maintain strong relationships with them?
Considering that the chances of selling to an existing customer are up to seven times higher than selling to a freshly acquired one, it begs the question — why not invest some more effort in customer retention?
What Is Customer Retention, Anyway?
For starters, customer retention is the ability of a company to retain their existing customers over a period of time. Let’s get a bit nerdy here.
Let’s say you have 1,000 customers at the beginning of the period. You acquire 100 customers during the period, and by the end of the period you have a total of 800 customers who have stayed with you.
You can calculate the ability of your business to retain customers, also called as customer retention rate, by:
((Number of customers at the end of a period – the number of new customers acquired during that period) / Number of customers at the start of the period) * 100
((800-100)/1000) * 100) = 70% retention rate
While the ideal CRR (customer retention rate) would be 100%, it is totally unrealistic to never lose a single customer. However, to be on safer side, you should aim to achieve a CRR between 85% and 90%.
Let’s have a look at a few interesting figures:
- A 5% increase in the customer retention rate .
- Customer retention costs less than acquiring new customers, as revealed by .
- Around spend more in their third year of buying from you when compared to the purchases made by them in the first six months.
All of that can be summed up into one statement: Customer retention costs you less, earns you more sales in the long-run, and boosts your ROI.
Why Are Customers Getting Lost?
So far so good — a high CRR can keep your business going. But it isn’t easy to retain customers. A single mistake, and you might lose them forever.
Here are a few common reasons why customers are lost:
Poor customer service experience
There is nothing as bad as providing a customer with a poor experience. To make matters worse, dissatisfied customers will often just switch over to a different brand instead of telling you what went wrong and giving you a chance to improve.
According to a 2018 study from Microsoft, moved to a different brand in the last year due to poor customer experience. It is estimated that never return after having a bad experience with a brand!
Failure to value them
It is important to bear in mind that customers didn’t choose you for the price, but for the value they receive.
This is perfectly illustrated by Apple which continues to stand in the market unrivaled. By Q4 of last year, Apple had captured despite selling just 18% of the total units.
Customers choose Apple for the value it provides, irrespective of the price.
Treating new and existing customers differently
Who doesn’t like newcomers? Every business does, but this doesn’t mean that you should ignore the existing customers. While offering discounts and offers to lure in new customers is often necessary, this might make your existing customers feel left out.
This is perhaps why feel that brands are doing less to reward them for their loyalty.
How Can Your Retain Your Existing Customers?
Now that we’ve highlighted the pain points, let’s have a closer look at how you can retain your customers:
Wow them with amazing customer experience
Nothing works more favorably than providing amazing customer service. Find and create opportunities to appreciate your customers’ loyalty.
How about some unexpected gestures? Imagine you bought a pair of shoes from a store. A week later, you receive a pair of socks along with a handwritten note that says, “We look forward to seeing you again.”
Who would not be flattered by such a kind gesture? This unexpected display of attention can go a long way and help you win customers for a lifetime.
Pro tip: Go the extra mile and to provide a more personalized approach.
Avoid going overboard
In an attempt to lure in customers, businesses often end up writing beyond-exceptional product descriptions and setting overly high expectations.
is a sure shot way to lose credibility. Thus, make sure that you remain as accurate as possible and set the right expectations. Try to accentuate your unique selling points and offer realistic solutions to your customers’ problems.
Leverage their feedback
Although most buyers will leave the transaction with no words spoken, there are a few customers who will be willing to say something back. Nothing provides better insights than the feedback provided directly by your customers.
Encourage them to . This will not only help you better but will also help you identify your business’s weak points.
Interact with your customers on a regular basis
Do you have sales coming up? Or, have you recently introduced an amazing line of products? If you don’t have anything special planned, how about sending seasonal greetings and “happy birthday” offers?
Just make sure that you keep the communication loop with your customers open and show them that you think about them. This, in return, reminds them of you, while also establishing and strengthening your credibility.
Your Turn
There are countless ways to improve retention and the best one will probably unique to your business. The key is to add value and engage with your customers. The techniques described above won’t cost you a ton of money, and you can easily integrate them into your business.
What do you do to boost your customer retention rate? Let us know in the comments below!
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Author Bio:
Josip Mlinaric is an e-mail marketing and outreach specialist at Point Visible, a marketing agency providing link building and . He likes to say he has a simple and calm mindset in his approach towards life in general and likes to relax by experimenting in the kitchen or just chilling and listening to music.
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